I’m the Washington D.C. bureau chief for Forbes and have worked in the bureau for more than two decades. I've spent much of that time reporting about taxes -- tax policy, tax planning, tax shelters and tax evasion. These days, I also edit the personal finance coverage in Forbes magazine and coordinate outside tax, retirement and personal finance contributors to Forbes.com. You can email me at jnovack@forbes.com and follow me on Twitter @janetnovack.

Memo To Mitt Romney: The 47% Pay Taxes Too

A secret videotape of Republican Presidential candidate Mitt Romney talking at a private fundraising event earlier this year could revive—in virulent form— the debate Texas Gov. Rick Perry started last year when he complained of “the injustice that nearly half of all Americans don’t even pay any income tax.” The video, leaked to left-leaning Mother Jones(excerpts and a report here), captures the normally cautious Romney at his most candid and impolitic.

Here’s part of what he had to say:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax….”

Political suicide? I’ll leave it to the pundits to analyze the impact Romney’s comments will have on his election prospects. (It should be noted, however, that while Romney does have an edge among high-income voters, billionaire Warren Buffett is hardly the only rich guy supporting the Democratic incumbent. See Millionaire Towns For Obama.)

But since I write about tax and budget issues, let me make a few serious points about the 46.4% of American households who paid no federal income taxes for 2011. First of all, according to the Tax Policy Center, more than 60% of those non-income tax paying households did pay federal payroll taxes—meaning Social Security and Medicare taxes. (Considering all Americans households, including those that owed income tax, 62% paid more in payroll taxes than in federal income taxes.)

What of the 18.1% of U.S. households that paid neither income nor payroll taxes? More than half of them were headed by a senior–in other words, by someone who paid payroll taxes and likely some income taxes too, in the past. (No, the amount the elderly have paid in does not cover the cost of the Medicare benefits they are now getting. And that is true despite the fact that in a Romney TV ad attacking Obamacare’s cuts to the growth in Medicare spending, an announcer seems to suggest otherwise, intoning: “You paid into Medicare for years, every paycheck…. So now the money you paid for your guaranteed healthcare Is going to a massive new government program that’s not for you.”)

Of course, it goes without saying, that those folks who aren’t paying federal taxes are almost all paying state and local taxes—state sales taxes, real estate taxes (either on their homes or built into their rents) and possibly state income taxes too, since those taxes tend to exempt fewer poor families than does the federal income tax. If they buy gasoline, liquor or tobacco, or have telephones, they’re also feeding the federal purse.

Yes, there’s a serious tax policy issue here. The percentage of households owing federal individual income taxes has fallen in recent years in part because both Republicans and Democrats have looked to provide help for working families through the child credit, the earned income tax credit and other “tax expenditures,” rather than through more direct spending programs. That might not be the best way to do things. But note again that the largest group excluded from paying income tax because of special tax expenditures are seniors, who get a bigger standard deduction than younger folks and more importantly, special tax treatment for their Social Security benefits. As I explain here , Tax Policy Center researchers calculate that 16.7 million elderly households will pay no tax in 2011 because of those two breaks and a special low income credit for the elderly. By comparison, the earned income tax credit, the child credit and the child care credit combined keep only 11.5 million households with kids from paying income tax.

So maybe a higher share of the American public should be paying at least some amount of federal income tax. The tax code would be simpler, and probably fairer, if we reduced the number of tax expenditures for the wealthy and non-wealthy alike. We all might give more thought to spending restraint. Then, too, we’re all protected by the military and rely on public infrastructure to get to our jobs, schools, stores and doctors—and yes, to build our businesses.

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Why not assume he paid even more? You saw all of the tax returns he is required to file and more. Each was a clean as a whistle. So, , why do you assume the rest were crooked?

You make a lot of assumptions bordering on allegations with nothing on which to support them.

Since you enjoy speculating; Barack Obama just had a campaign bundler Penny Pritzker, negotiate the purchase a $35 million home for him in Hawaii. Can a family in a $35 m home relate to the poor? Why not go have a ball with that?

The reality, “who cares?” BHO can get any home he wants. I want to know what he is accomplishing in office.

Anyone who sold their older home and made over $70,000 in profit got a deduction of that amount. Getting a $70,000 deduction is not unusual in America. Even someone in the lower mid income bracket can get that much. Try that in a socialist nation and you are right. No one gets those types of deductions except the very wealthy and elite politicians.

Yes, if you make a business out of breeding your dog, you can get deductions and even buy special food. It’s really up to you.

Why does it matter if Ann is a no show because she went to a horse show? A no show for what?

Mitt Romney’s horse is worth roughly $800,000 to $900,000, literally. He spends money on the horse in order to make money on the horse. His horse is considered a small business and if he spends $70,000 on a trainer and such it is considered an expense and a tax write off. His horse was in the Olympics. If I own a small ice cream shop and I spend $70,000 building a new store and paying employees it is also a tax write off. Mayor Bloomberg’s daughter also owns a horse worth nearly $1,000,000 as do many women and men in Greenwich, Connecticut. Mayor Bloomberg allows thousands of healthy and adoptable kittens and puppies to be murdered in shelters each year and then he buys Georgina this horse. Bloomberg isn’t so bad all in all, I don’t disagree with everything he does but I certainly wouldn’t vote for him over most democrats. I hope this helps you understand why Mitt gets a tax write off.

Because the billions already funneled into the educational system isn’t enough. Besides, those funds never make it into the classroom. You’ll always have people asking to burn more money into a system that has apparently failed. Why are you ignoring this simple fact? I suppose a couple more billion into the post office will revitalize it too. Wake up.